Update on capital grants expected ‘early this year’

• Defra due to make announcement soon

• Existing agreements continue as usual

• Change affects existing applications

A long-awaited update on the future of Defra’s capital grant scheme is expected early this year, says the government.

It follows widespread anger and frustration after capital grants were quickly closed to new applications last November – plunging hundreds of agri-environment projects into doubt across the region.

Defra blamed the closure on exceptional demand for 76 capital grant items. In a statement, it said: “This is being done to prioritise funds for areas that will have the greatest benefit for food security and nature conservation.”

‘Real blow’

Unprecedented demand meant the department was forecast to spend 49% more on capital grants during 2024/25 than it spent last year and 125% more than in 2022/23, said a Defra spokesperson.

“Some of the capital grants offer for farmers will temporarily close to new applications. Agreements that have already been signed will be met, with further funding prioritised to help build a sustainable farming sector.”

NFU deputy president David Exwood described the sudden closure of so many capital grants as a real blow to farmers – many of whom were relying on the funding to achieve their environmental ambitions. “The messaging of this is confusing,” he said.

Left in lurch

“Farmers and growers are being asked to adopt measures to improve the environment but have been left in the lurch without access to the key grant schemes which will enable them to do this.”

“With applications timed to fit in with the farming calendar – and no confirmation that existing applications would progress – it was incredibly frustrating and unhelpful that members would receive no further information until after the New Year.

“The whole agricultural transition has lurched from one crisis to another,” said Mr Exwood. He added: “This is only the latest scenario where Defra has failed to provide clarity and certainty.”

Following the autumn Budget, farmers were already facing the accelerated phaseout of direct payments. “This sudden decision has once again left farmers wondering how on earth they can plan for the future with these ever-moving goalposts. We are holding urgent meetings with the government to try and get some much-needed clarity for members.”

Last remaining schemes still open

Defra is pointing farmers in the direction of grant schemes that are still open – although most are remain closed. That said, farmers can still apply for the following grants:

• Woodland Tree Health grants, which help protect tree health against devastating plant pests and diseases.      

• Capital grant plans and management plans are important to help support the development of new Countryside Stewardship Higher Tier agreements.   

• Protection and Infrastructure grants and Higher Tier capital grants, help support delivery of high value environmental benefits, such as re-wetting peat.    

Applications which relate to the capital grant elements that are temporarily withdrawn, it will be on hold for now. “You will be contacted in early 2025 with information about what happens next,” says Defra.

“If your application is for one of the grants that are still open, it is being processed. You should expect to receive an offer, provided there are no issues with your application.

“Payments under existing agreements will continue as usual following the current process. The change only impacts new applications.”ue as usual following the current process. The change only impacts new applications.”

Betrayal of trust’ punishes farmers

Closure of the capital grant scheme has sparked a widespread backlash among farmers – and increasing exasperation.

National Sheep Association chief executive Phil Stocker says: “We have worked tirelessly and proactively to help test scheme design and to feedback on members’ experiences. But what we are seeing now is a betrayal of trust and confidence.”

Many farmers who had wholeheartedly thrown themselves into the pilot for the Sustainable Farming Incentive now faced uncertainty. On top of that, the speed of the Basic Payment Scheme reductions far exceeded expectations.

The closure of capital grants come after overwhelming demand for some capital grant items, with the main capital grant offer temporarily closed to new applications and denying access to a total of 76 grant items.

Farmers were being punished for their enthusiasm to become more sustainable, added Mr Stocker. “Defra and Government are again showing a lack of understanding that farming businesses have to budget years in advance.”

Many farmers cannot afford to carry out these environmental works without funding and, while we may be seeing record sheep prices, these are struggling to cover the inflationary pressures within business enterprises.